With the BJP leaders from Punjab also raising a banner of revolt against their own party-led Central Government, along with all opposition parties, over the decision to impose 12 per cent GST on sarais (inns) of the Golden Temple, the Central Board of Indirect Taxes and Customs (CBIC) has made it clear that the GST was “not applicable” on room rent in religious precincts by charitable or religious trusts.
At the same time, the Shiromani Gurdwara Parbandhak Committee (SGPC) on Friday sought clarification from the Union Finance Ministry over the 12 per cent GST on sarais.
Issuing a detailed clarification through a series of tweets on Thursday night, CBIC clarified that the Shiromani Gurdwara Parbandhak Committee (SGPC) has been charging the Goods and Services Tax (GST) "on its own" whereas no such directions were issued. It stated that the Sikh body has started collecting the GST on its own.
It added that since July 18, 2022, the SGPC has been charging 12 per cent GST from the devotees who have been staying in its three sarais — Baba Deep Singh Yatri Niwas, Mata Bhag Kaur Niwas, and Sri Guru Gobind Singh NRI Niwas.
The Finance Ministry’s clarification came following a demand from various quarters, including BJP leaders. AAP’s Rajya Sabha MP Raghav Chadha had also met Union Finance Minister Nirmala Sitharaman a day before and submitted a memorandum regarding withdrawal of the decision of imposing 12 per cent GST on sarais (inns) located near the Golden Temple in Amritsar.
Notably, the GST Council, in June, had decided that a 12 per cent tax will be levied on all hotel rooms that cost below Rs 1,000 per day. Certain sarais, managed by the SGPC, started collecting GST for rents up to Rs 1,000 per day “on their own” after the GST proposal on room rents below Rs 1,000 per day came into force on July 18, 2022.
As per the recommendation of 47th GST Council, hotel rooms having room rents up to Rs 1,000 per day were brought under the GST rate slab of 12 per cent from the earlier exempt category. However, the GST is not applicable on room rent in religious precincts by charitable or religious trusts, clarified the CBIC, under the Finance Ministry.
It added that there was another exemption on renting of rooms in religious precincts by a charitable or religious trust, where the amount charged for the room is less than Rs 1,000 per day, it said, adding that this exemption continues to be in force without any change.
“The precincts of a religious place, in terms of above notification, has to be given broader meaning to include a Sarai even if it is located outside the boundary wall of a complex of a religious place, in the surrounding area, and managed by the same trust or management,” it added.
Seeking clarification from the Finance Ministry, the SGPC contended that since these sarais were located outside the premises of the Golden Temple, the GST was being charged after receiving a notification, dated July 13, 2022.